Subprime Rates


DEFINITION of 'Subprime Rates'

Interest rates charged to subprime borrowers, such as on loans to people with poor credit scores from one or more credit bureau. Subprime rates will be higher than prime rates for the same type of loan, although there is no exact amount or spread that constitutes subprime.

BREAKING DOWN 'Subprime Rates'

Factors that affect subprime rates include the size of the loan, the income of the individual, the number of delinquent accounts on the borrower's credit report and the amount of the down payment for a given loan.

Subprime lenders use what is called "risk-based pricing" to determine how much interest to charge on a given loan or class of borrower. This pricing method may change as economic conditions change in the broad financial markets.

  1. Subprime Lender

    A type of lender that specializes in lending to borrowers with ...
  2. Subprime

    A classification of borrowers with a tarnished or limited credit ...
  3. Second Chance Loan

    A type of loan associated with subprime lending and borrowers ...
  4. Down Payment

    A type of payment made in cash during the onset of the purchase ...
  5. Prime

    A classification of borrowers, rates or holdings in the lending ...
  6. Risk

    The chance that an investment's actual return will be different ...
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  1. If my mortgage lender goes bankrupt, do I still have to pay my mortgage?

    Yes, if your mortgage lender goes bankrupt you do still need to pay your mortgage obligation. Sorry to disappoint, but there ... Read Full Answer >>
  2. What is a subprime mortgage?

    A subprime mortgage is a type of loan granted to individuals with poor credit histories (often below 600), who, as a result ... Read Full Answer >>
  3. Will my credit score suffer from debt consolidation or refinancing?

    You have several options for reducing your debt burden. You can enroll in a professional debt management plan, or consider ... Read Full Answer >>
  4. Can I file for bankruptcy more than once?

    Filing bankruptcy is never a simple decision, but sometimes it is the best thing you can do in your current financial situation. ... Read Full Answer >>
  5. Why would someone change their Social Security number?

    In general, the Social Security Administration, or SSA, does not encourage citizens to change their Social Security numbers, ... Read Full Answer >>
  6. What types of liens are seen as good and which are bad for my credit?

    Creditors that allow purchases to be made through financing often require property to be pledged against a credit account; ... Read Full Answer >>

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